Signage outside a Papa John’s International pizza restaurant in Louisville, Kentucky on Monday, February 22, 2021.
Luke Sharrett | Bloomberg | Getty Images
Papa Johns reported quarterly earnings on Thursday that missed estimates as higher food costs, a new corporate headquarters and employee bonuses weighed on earnings despite high demand for pizza during the pandemic.
The company’s shares fell more than 7% in premarket trading.
The company reported, relative to Wall Street expectations based on an analyst survey by Refinitiv:
- Earnings per share: 40 cents adjusted compared to 46 cents expected
- Revenue: $ 469.8 million versus $ 467.9 million expected
The pizza chain reported net income of $ 13.2 million, or 28 cents per share, for the fourth quarter, after a net loss of $ 2.1 million, or 18 cents per share, last year.
In the fourth quarter, the company spent $ 6 million, or 12 cents a share, on its strategic reorganization, including opening an office in Georgia. The company also paid out $ 2.7 million in year-end bonuses for its restaurant employees, saving 6 cents per share. Increased raw material costs also weighed on earnings in the quarter.
Excluding the reorganization costs, Papa John earned 40 cents per share and missed the 46 cents per share that the analysts surveyed by Refinitiv had expected.
Net sales rose 12.5% to $ 469.8 million, beating expectations of $ 467.9 million. Worldwide sales in the same store grew 15.5% in the quarter.
Sales in the same store in North America increased 13.5%. Papa John’s has also received higher royalties from its franchisees because its operator support program began after the founder John Schnatter scandal. International sales in the same store rose 21.4% for the quarter.
Papa Johns opened 40 new Netto locations, mainly due to international openings. As of December 27, around 65 of the company’s 5,400 locations were temporarily closed due to government restrictions, mostly in Latin America and Europe.
The company also shared an update on its plans to open an office in Atlanta, saying it was scheduled to open by summer. Papa John’s expects to spend $ 15 million to $ 20 million through 2021 on the cost of adding the office, including severance pay, hiring, and moving employees.
Papa John declined to provide an outlook on his financial goals for 2021, citing the uncertainty caused by the pandemic.
Also on Thursday, Domino’s Pizza reported quarterly results that missed estimates.